Oct. 20, 2010
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
A co-defendant in an upcoming mortgage fraud trial wants to exclude the testimony of a government expert and two witnesses.
Attorney Thomas J. Farrell, representing Neshannock Township resident Anthony Staph Jr., filed the motions Oct. 12 in Pittsburgh federal court.
Staph, a real estate appraiser, was indicted on one felony count of bank fraud in the Affordable Housing of Lawrence County scandal. Prosecutors charged that in November 2005 Staph inflated the prices of seven New Castle properties to $350,000.
Federal investigators allege Staph’s appraisals were instrumental in First Commonwealth Bank approving a $250,000 loan to Affordable Housing. The Lawrence County Housing Authority created the nonprofit agency in 2003 using $200,000 in federal funds.
Co-defendant Nicholas DeRosa, of North Cascade Street, faces one count of bank fraud, two counts of mail fraud and one count of money laundering conspiracy. He is a retired city school administrator and former city councilman.
Farrell asked Senior District Judge Gustave Diamond to exclude the testimony of R. Robert Barone Jr., a state certified appraiser. Barone produced a report in September 2006 for the U.S. Department of Housing and Urban Development. In it, he listed the value of the properties at $198,500.
“This Court should preclude Mr. Barone from testifying because his opinion is based on unreliable data and information,” Farrell wrote. “In particular, in reaching his conclusions, Mr. Barone relies upon West Penn Multi-List real estate property listings ...”
He claimed the service does not verify the listings’ accuracy.
Farrell also said that Barone did not account for the time the structures were vacant.
“The properties appraised by Mr. Staph deteriorated significantly after he finished the appraisals,” Farrell wrote. “In the (10) months after the Staph appraisals were completed, the properties were vacated and vandalized and were left unattended in the cold winter months and stripped of carpeting, tiling and various fixtures ...
“The properties as appraised by Mr. Barone were simply not the same properties appraised by Mr. Staph.”
Staph’s attorney then filed a motion to bar Robert Ratkovich and Gary Felasco, former county treasurer, from testifying. Farrell also reiterated his request to separate his client’s case from DeRosa’s. The trial is scheduled to begin Nov. 1.
Ratkovich, of 512 Norwood Ave., pleaded guilty in July 2009 to bank and mail fraud conspiracy in addition to money laundering conspiracy. The former housing authority supervisor and city councilman is set to be sentenced at 10 a.m. Oct. 27 in Pittsburgh.
Diamond sentenced Felasco in September 2009 to three years probation for failing to file a 2005 federal tax return. The case was separate but related to the Affordable Housing scheme. Court records stated Felasco illegally collected $35,000 from the Affordable Housing purchases. In doing so, he underpaid the IRS $10,000.
In his motion, Farrell provided seven statements from government documents that he said amounted to hearsay. The remarks involved another person associated with city-based Castle Realty, where Staph is employed.
A federal investigator noted in a July 2008 interview with Felasco that “DeRosa told Felasco that the appraisals were nothing more than a formality, and they would get the appraisals they wanted.”
“The government may argue that these statements are admissible as co-conspirator statements,” Farrell wrote. “There is no independent evidence that (Staph) was part of a conspiracy.”
The U.S. Attorney’s Office has until Tuesday to respond.
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